B. Riley Financial Announces Private Bond Exchange to Reduce Debt by Approximately $35 Million

Rhea-AI Summary

B. Riley Financial (NASDAQ: RILY) has announced a private bond exchange agreement that will reduce its total outstanding debt by approximately $35 million. The agreement involves an institutional investor exchanging approximately $123 million in Senior Notes for $88 million in newly issued 8.00% Senior Secured Second Lien Notes due January 1, 2028.

The exchange includes approximately $86 million in 5.5% Senior Notes (NASDAQ: RILYK) due March 2026 and $37 million in 5.0% Senior Notes (NASDAQ: RILYG) due December 2026. As part of the agreement, the company will issue warrants to purchase about 351,000 common shares at an exercise price of $10.00 per share, exercisable for seven years from issuance.

Positive

• Debt reduction of $35 million improves balance sheet
• Extension of debt maturity from 2026 to 2028
• Successful private negotiation with institutional investor indicates market confidence

Negative

• Higher interest rate on new notes (8.00% vs previous 5.0-5.5%)
• Potential dilution from 351,000 warrant shares
• Total debt remains significant despite reduction

Insights

Financial Restructuring Specialist

B. Riley's $35 million debt reduction through this exchange agreement represents a meaningful deleveraging event for a company with only a $127 million market capitalization. The transaction structure reveals important dynamics about the company's financial position:

The institutional investor is exchanging $123 million in unsecured notes for $88 million in new secured notes, accepting a 28.5% principal reduction but receiving several significant concessions: (1) higher interest rate of 8.00% versus the previous 5.0-5.5% rates, (2) second-lien security interests rather than unsecured status, and (3) equity upside through warrants for 351,000 shares.

This transaction structure suggests the institutional investor had concerns about full repayment of the original notes. The $10 warrant exercise price (versus current $4.05 share price) indicates the investor requires substantial upside potential to justify the principal reduction, while B. Riley must pledge collateral to secure the remaining debt.

While the immediate debt reduction improves B. Riley's balance sheet metrics, the higher interest rate will partially offset cash flow benefits. The Chairman's remarks about "addressing our capital structure" and pursuing "additional transactions" signal this is part of a broader financial restructuring rather than an isolated event.

LOS ANGELES, March 26, 2025 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY) ("BRF" or the "Company"), a diversified financial services company, today announced it has entered into a privately negotiated exchange agreement (the "Agreement") with an institutional investor, which will reduce the Company's total outstanding debt by approximately $35 million.

Pursuant to the Agreement and subject to the completion of certain closing procedures, the investor has agreed to exchange approximately $123 million in outstanding Senior Notes, consisting of approximately $86 million in 5.5% Senior Notes due March 31, 2026 (NASDAQ: RILYK) and approximately $37 million in 5.0% Senior Notes due December 31, 2026 (NASDAQ: RILYG), for $88 million in newly issued 8.00% Senior Secured Second Lien Notes due January 1, 2028 (the "Notes"). In addition, the Company is issuing to the investor warrants to purchase an aggregate of approximately 351,000 common shares at an exercise price of $10.00 per share. The warrants are exercisable for a period of seven years from the issuance date.

Bryant Riley, Chairman and Co-Chief Executive Officer of BRF, said: "This exchange represents an important incremental step in addressing our capital structure. We continue to thoughtfully evaluate ways to improve the Company's balance sheet and expect there will be opportunities to conduct additional transactions by leveraging capacity under the Senior Secured Second Lien facility or another instrument."

Moelis & Company LLC acted as financial advisor and Sullivan & Cromwell LLP acted as legal advisor to BRF with respect to the Agreement. Seaport Global Securities LLC acted as financial advisor to the institutional investor.

No Offer or Solicitation
This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall it constitute an offer to sell, solicitation or sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful.

About B. Riley Financial
B. Riley Financial (BRF) is a diversified financial services company that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. BRF leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its subsidiaries and affiliated entities, BRF provides end-to-end financial services across investment banking, institutional brokerage, private wealth and investment management, financial consulting, corporate restructuring, operations management, risk and compliance, due diligence, forensic accounting, litigation support, appraisal and valuation, auction, and liquidation services. BRF opportunistically invests to benefit its shareholders, and certain affiliates originate and underwrite senior secured loans for asset-rich companies. BRF refers to B. Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. For more information, please visit www.brileyfin.com.

Forward-Looking Statements
Statements made in this press release that are not descriptions of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of today's date. All statements other than statements of historical fact are forward-looking statements and include the completion of the closing procedures related to the exchange. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's performance or achievements to be materially different from any expected future results, performance, or achievements. Forward-looking statements speak only as of the date they are made and the Company assumes no duty to update forward-looking statements, except as required by law. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, some of which are beyond the control of the Company, including, but not limited to, the risks described from time to time in the Company's periodic filings with the SEC, including, without limitation, the risks described in the Company's 2023 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and the Company undertakes no duty to update this information.

Contacts
Investors
ir@brileyfin.com

Media
press@brileyfin.com 

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SOURCE B. Riley Financial

FAQ

How much debt reduction will B. Riley Financial (RILY) achieve through the March 2025 bond exchange?

B. Riley Financial will reduce its total outstanding debt by approximately $35 million through this private bond exchange agreement.

What are the terms of RILY's newly issued Senior Secured Second Lien Notes in the 2025 exchange?

The new notes are 8.00% Senior Secured Second Lien Notes due January 1, 2028, worth $88 million.

What warrants are being issued as part of RILY's March 2025 bond exchange?

RILY is issuing warrants to purchase 351,000 common shares at $10.00 per share, exercisable for seven years.

Which existing RILY notes are being exchanged in the March 2025 agreement?

$86 million in 5.5% Senior Notes (RILYK) due March 2026 and $37 million in 5.0% Senior Notes (RILYG) due December 2026.